UCI Decides to Retain Medical Center Management Role : Rejects Proposed Lease Arrangement With Hospital Firm

UC Irvine officials have decided against a proposed takeover of the university medical center’s management by American Medical International as a way of solving the hospital’s financial woes.

University and AMI spokesmen Thursday confirmed that there will be no lease-management agreement between the hospital and the private firm. But UCI will continue to discuss possible joint projects with the giant hospital chain.

The decision to forgo private management “evolved” as it became evident that the state plans to commit money to improving UCI Medical Center in Orange, acting director Leon Schwartz said.

By renovating and expanding the medical center, officials hope to attract growing numbers of privately insured--paying--patients, to offset the money the hospital loses by treating large numbers of indigents, Schwartz said.

The medical center, Orange County’s largest provider of health care to the poor, finished last fiscal year $9.6 million in the red.

This year’s anticipated deficits will be offset by an $8.5-million bailout approved by the Legislature last June. In addition, $7 million is being spent this year to renovate the hospital’s intensive care unit.

Further, Gov. George Deukmejian’s proposed budget for next year sets aside about $7 million more for capital improvements, Schwartz said.

UCI Chancellor Jack Peltason plans to address the UC regents on the AMI issue next month, Schwartz said.

There were “absolutely” no hard feelings between UCI and AMI, he said. The private management plan was only an option, and although it was seriously pursued, it was never the only method of financial rescue that UCI contemplated, he said.

The decision will have no impact on AMI’s plans to build the $86-million Irvine Medical Center in Irvine next year, which is planned with UCI’s cooperation, said Schwartz and AMI spokesman Jeffrey Simmons.

If private management for the UCI Medical Center in Orange had been approved, it would have been California’s first UC hospital to affiliate with a for-profit chain. Such takeovers are becoming commonplace nationwide as the teaching hospitals struggle to control mounting debts.

But Schwartz said the precedent-setting aspect of the proposed management takeover was a factor in the decision.

“It’s always easier to not do something different. Setting a precedent would have made it that much more difficult,” he said. “So it’s a natural thing to continue doing whatever we’ve been doing.”

Another issue was labor, officials said. AMI had not planned to recognize UCI Medical Center’s labor contracts and would have shifted hospital workers from the university to the AMI payroll, according to a draft proposal. At least one of the unions representing hospital employees had protested the plans to regents.

UCI this week notified the American Federation of State, County and Municipal Employees, which represents most of the hospital’s employees, of the decision not to pursue lease-management.

While the university will continue to discuss joint projects with AMI, it will “not enter into an affiliation agreement . . . in which AMI would be the employer of medical center employees,” according to a letter from UCI’s labor relations coordinator to the union.

Nadra Floyd, executive director of the union’s council in Oakland, said the letter indicated the two were discussing an arrangement to have AMI refer Orange County patients to the medical center in Orange for highly specialized care.

The letter also stated that the two continue to discuss “joint projects” such as a psychiatric facility on the UCI campus and an “imaging center”--employing new diagnostic technology--at AMI’s yet-to-be-built Irvine Medical Center.

The university holds nearly one-third of the seats on the AMI-Irvine hospital’s board of directors and will have a teaching affiliation with the new medical center.

According to a “discussion draft” of the AMI lease-management proposal last year, all UCI Medical Center employees would have been transferred to AMI’s payrolls for at least one year if AMI had taken over. AMI “would be exempt from historic and existing labor union contracts,” according to a copy of the draft obtained by The Times.

Floyd said the union did not believe that “the takeover of a teaching hospital by a for-profit institution was in the best interest of providing quality health care for the public.”

Further, she said, AMI offered no employment guarantees beyond one year, nor were there assurances about employees’ salaries, holidays, benefits and other “rights,” such as grievance procedures.

The American Federation of State, County and Municipal Employees represents about 800 employees at the hospital, including patient care and laboratory technicians, hospital assistants, clerical workers, custodians and food service workers.

Physician Support

However, Dr. Gerald Weinstein, acting dean of UCI’s College of Medicine, said the AMI management proposal had the support of the “great majority” of faculty physicians. While a few had questioned whether care to the poor would be cut back under private management, he said the draft proposal “covered the area quite well and had it quite protected.”

Floyd said the university’s decision against private management “doesn’t end the work we have to do.” The union plans to address the Legislature on the need to support UCI Medical Center and other public teaching hospitals because they “inevitably do a lot of care for the medically indigent adults, and there has to be acknowledgement that that care is more costly,” she said.

Acting director Schwartz stressed that the ultimate cure for the medical center’s financial ills is “proper reimbursement” from the state and county for treating Medi-Cal and indigent patients.

He said the planned improvements to the medical center include construction of a cancer center, plus the development of a psychiatric hospital and research center in south Orange County. Both might be pursued in a partnership with AMI, he said.

‘Imaging Center’ Partners

UCI and AMI already are partners in a high-tech diagnostic tool called an “imaging center” on the grounds of the medical center. The imaging center is a “state-of-the-art way of getting an X-ray type picture from all parts of the body” without exposing the patient to radiation, Weinstein said. It is one of the few in Southern California, and the partnership has been “very successful” for the College of Medicine, he said.

“We think there are a lot of opportunities for UCI and AMI and the community,” said UCI spokeswoman Kathy Jones. “The lease-management option was an option. As it turned out, it wasn’t the best option for us. We regard this as a positive thing.”